FACTORY ORDERS (MarketWatch)
“Factory orders rose 1.8% in December, the Commerce
Department said Tuesday…Durable goods orders climbed 2.4%, unchanged from last
week's initial estimate.”
PAUL SCHATZ COMMENTARY EXCERPT (Heritage Capital)
“On the surface Friday looked like one of the those
“puke” days when anything and everything go down. It was an ugly day, but I
didn’t see evidence of investors in full panic mode nor selling at any price
just to get out and relieve the pain. Friday looked like the makings of an
internal or momentum low where selling and would be at its worst for this
decline. Of course, one day later, it’s only a guess until there is more to
view…I think buying the dip will be rewarded.” Commentary at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 jumped about 1.5% to 3298.
-VIX dropped about 11% to 16.05.
-The yield on the 10-year Treasury rose to 1.602.
Short covering rally or is the dip over? Let’s review
some numbers…
The daily sum of 20 Indicators improved from -13
to -6 (a positive number is bullish; negatives are bearish). The 10-day
smoothed sum that negates the daily fluctuations dropped from -66 to -78.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term. This result remains bearish.
-My basket of Market Internals remains bearish.
-The S&P 500 is too far above its 200-dMA when
sentiment is considered so we now have one topping indicator warning of a top.
-Today was a statistically significant up-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically-significant, up-day is followed by a down-day about
60% of the time. Today was the 6th statistically-significant day in
the last 3 weeks. That happens and tops
or bottoms, so this indicator isn’t giving a clear bear or bull sign now,
except that Wednesday would be expected to be a down day.
Sharp snap-back rallies are not unusual during pullbacks;
but sharp rallies can also occur after a bottom. It is possible that the dip
has fizzled out, but indicators aren’t confirming it yet. So, we’ll see
tomorrow.
If we are still in a dip, Major support levels are:
-50-dMA, now at 3218
-100-dMA, now at 3116
-200-dMA, now at 3016
It is very unlikely that any retreat would be lower than
the 200-dMA.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -1
Most Recent Day with a value other than Zero: -1 on 4 February
(The S&P 500 was too far above its 200-dMA when sentiment is considered.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher is a Buy
Sign.
MOMENTUM ANALYSIS:
During corrections momentum analysis may not be useful.
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
*For additional background on the ETF ranking system see
NTSM Page at…
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
NEGATIVE / BEARISH on the market.
Market Internals are a decent trend-following analysis of
current market action but should not be used alone for short term trading. They
are usually right, but they are often late.
They are most useful when they diverge from the Index. In 2014, using these internals alone would
have made a 9% return vs. 13% for the S&P 500 (in on Positive, out on
Negative – no shorting).
Using the Short-term indicator in 2018 in SPY would have
made a 5% gain instead of a 6% loss for buy-and-hold. The methodology was Buy
on a POSITIVE indication and Sell on a NEGATIVE indication and stay out until
the next POSITIVE indication. The back-test included 13-buys and 13-sells, or a
trade every 2-weeks on average.
My current stock allocation is about 45% invested in
stocks as of 27 January (down from 60%). This is a conservative position
appropriate for a retiree. You may wish to have a higher or lower % invested in
stocks depending on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the VOLUME, VIX, PRICE, and SENTIMENT Indicators
were neutral. Overall, the Long-Term Indicator improved to HOLD.
